EU Market: Carbon ends flat after post-auction buying lifts prices from new 9-mth low

Published 17:41 on January 12, 2016  /  Last updated at 17:41 on January 12, 2016  /  EMEA, EU ETS  /  No Comments

European carbon prices touched a new nine-month low near €7 on Tuesday as selling carried on for a seventh straight day, though buyers briefly emerged after a bullish auction result.

European carbon prices touched a new nine-month low near €7 on Tuesday as selling carried on for a seventh straight day, though buyers briefly emerged after a bullish auction result.

The Dec-16 futures trading on ICE ended 2 cents lower at €7.15 after falling to an intraday bottom of €7.01 early in the session.

“We’re seeing more selling today, mainly from speculators.  Some of them covered their short [positions] following the strong auction, but the rise didn’t last,” one broker said.

The benchmark contract shot up to €7.24 in the minutes after the EU’s second auction of 2016, which cleared at €7.04 – some 4 cents above market.

Bidding interest in the sale was high at 23 participants submitting bids worth a total 11.49 million units, equivalent to an oversubscription rate of 3.35, which was nearly double Monday’s 1.83.

Trading on the front-year futures was again brisk at over 27 million allowances changing hands, with a further 8.1 million done along the rest of the curve.

Carbon held up compared to the wider energy complex, which continued to tumble.

Cal-17 German baseload power prices lost as much as 52 cents to a record low €24.40/MWh, while European coal for next year delivery dropped by 85 cents to $38.80/tonne.

The euro weakened slightly against the US dollar, which exacerbated the effect of lower German power on the clean dark spreads.

The Dec-16 EUAs are now down 13.8% since Dec. 31, 2015.

Market participants have said this month’s selling was initially sparked by speculators, who have built “massive” short positions akin to those said to be pushing crude oil prices to new multi-year lows.

Others added that some utilities were seen unwinding positions, while a few large industrials were also dumping EUAs in order to raise cash.

Meanwhile, the Dec-16 CER futures settled down 2 cents at a €0.42, falling 7 cents or 14% since the end of 2015.

By Mike Szabo – mike@carbon-pulse.com

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